Marriott Arbitrage - Which Hotels Should You Book?

As we delve deeper into Marriott’s announcement of their point requirements for free hotel stays, we start to unravel the information to understand what we should be doing to extract value out of the transition period.

For those that aren’t quite up to speed on what’s happening, I’ll try to break it down in a nutshell.

What Happened?

I won’t go into dates and times but rather, I’ll give you a general understanding of the key highlights.

Marriott purchased Starwood hotels and has taken over all of Starwood’s hotels. Hotel brands will remain the same but Marriott will now be the operator of those hotels.

In terms of the loyalty programs, SPG had a fantastic loyalty program called Starwood Preferred Guest (SPG) which had many very loyal enthusiasts. The Starwood program’s points (SPG) was actually worth more than the points issued by Marriott (Marriott Rewards) so Marriott decided to allow for the transfer of SPG to Marriott Rewards at a 1:3 ratio. This left many opportunities for arbitrage like the Marriott Travel Packages that we wrote extensively about.

When it came to using points for free hotel stays, the Starwoods and Marriott redemption schedules were different, meaning Marriott needed to come up with a plan to align the two. Marriott was left with the task of re-examining the over 6,500 hotels worldwide to come up with an equitable way to price out point redemptions. This realignment would need to be fair to Marriott Rewards Members, previous SPG Member, and the hotels themselves. This was no doubt a gargantuan task but Marriott managed to pull it off and released the redemption schedule for all of their hotels earlier in the week.

Okay, But Why Do I Care?

First off, stop being so cynical. Geesh.

The reason you should care is that Marriott has left a small window of incredible opportunity. As Marriott makes the transition of incorporating all hotels under this new structure, they have allowed for a “cooling off” period that allows users of both the Marriott and SPG program to fully understand and embrace the program.

It’s kinda like when you get a new step-mother and she lets you have Froot Loops for dinner only to force you to eat broccoli and liver after you’ve let down your guard a couple of months in. Thanks a lot “mom” … I can never trust again.

The time for Froot Loop is now people.

Between August 1st and December 31st, 2018, Marriott will NOT implement two very important things to their program:

Seasonality – new to the program is the ability for each hotel to set their own Low, Normal, and Peak season. This is important because each hotel is able to theoretically set its own pricing structure based on what they believe are their peak times. My main concern about this is that while I fully expect hotels to properly set their Standard and Peak seasons, I have a hard time believing that hotels will voluntarily set dates for their Off Peak (aka Low) Seasons. This takes away the certainty you used to get with a standard award chart.

A New Category 8 – Marriott will get rid of Tiers that hotels like the Ritz used to use and will introduce a new Category 8 which is significantly more expensive than any of the other categories. You can see from the chart above that Category 8 hotels have a big jump up from Category 7 in comparison to increases from other adjacent tiers.

What Does This Mean Exactly?

Geesh – you really like getting to the point eh?

This means that between August 1 and December 31, 2018, all future Category 8 hotels will be priced at Category 7 prices AND priced at Standard Rates regardless of when the reservation is for.

After January 1st, expect to pay a LOT more.

Let’s take a look at something that almost everyone might be interested in. A free hotel stay at the W Hotel in the Maldives.

Currently, the W Maldives is a Category 7 SPG hotel, meaning that it will cost you 30,000 SPG points a night, which is the equivalent of 90,000 Marriott points (1 SPG = 3 Marriott Reward Points).

On August 1, 2018, the W and every other former SPG hotel will fall under the Marriott umbrella and between August 1st and December 31st, the hotel will be priced at the Standard Category 7 hotel price, which is 60,000 Marriott Reward Points. After January 1, 2019, the hotel will become a Category 8 hotel.

So here’s the per night breakdown based on timing (in Marriott points):

Book between now and July 31st, 2018 – 90,000 Marriott Reward Points

Book between August 1st, 2018 and December 31st, 2018 – 60,000 Marriott Reward Points

Book after January 1st, 2019 – 70,000/85,000/100,000 Marriott Reward Points based on Low/Standard/Peak season

So What Should I Book?

Ah, the question that everyone wants the answer to. Unfortunately, there is no perfect answer but what I can do is give you a general guideline of what you should be looking for. From there you should base the decision on where you intend on travelling.

In general, you should be looking to book hotels that are going to be cheaper between 8/1/18 and 12/31/18 AND cheaper than if you booked them right now.

I took a look at the Google Sheet that I put together for this point announcement and threw in some logic into the sheet so you can now see when PointsNerd suggests you book your hotels.

You aren’t going to be the only one trying to get space in that hotel for an award redemption so be warned. I expect competition for top-end aspirational properties to be fierce. That’s why you’re reading this and preparing for battle.

But you could do something a bit risky to better your chances …

Please Tell Me

Oh … well, look who found their manners all of a sudden.

If you know what hotel you want to book and are anxious at the thought of no inventory being left when August 1st comes around, you can make a speculative booking now and call in after August 1st for a refund of the difference in points.

Marriott seemingly encourages this.

So the takeaway here is – book now, get a refund later.

What If My Hotel Is A SPG Hotel?

That’s when things get a little bit more complicated. SPG does not allow for holds on hotel rooms but rather requires you to have enough points to book.

This is a lot more challenging because not everyone has enough points to book the very aspirational properties we talked about earlier like the W Maldives even if you get a refund later.

So what can you do?

Well, you have two choices:

Do what 95% of the population will do, which is wait until August 1st and battle it out like it’s Thunderdome.

Or you can get yourself some points.

The only way to do that currently is to purchase points. Luckily SPG is currently offering a 35% bonus on all purchased points if you make your purchase of over 5,000 SPG points prior to July 2oth.

Normally, I wouldn’t recommend purchasing points but the bonus on this is pretty good and the timing is just about perfect to take advantage of some of those aspirational properties that SPG has that will transition to Marriott in a month’s time.

Essentially, you are prepurchasing Marriott points.

One caveat, you need to have had your SPG account open for at least 14 days before you can purchase points.

Conclusion

My God that was a lot to cover off.

The short version of this whole diatribe is that there is an unbelievably good opportunity to maximize your SPG and Marriott points in the period between August 1 and December 31st of 2018. That being said, there are plenty of Marriott properties that are better to book now than after August 1st, so take a look at the chart closely and figure out what makes sense for you and your family.

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Brian Ewanchuk is an avid frequent flyer and has held status amongst all the major North American carriers. While Brian has certainly redeemed across multiple programs, nowadays, he prefers a more simplified approach to his mileage earning and redemptions.

18 Comments

Myriam

Hi Brian
Do you know if the date really is August 1st? It seems like there is a debate online with Marriott saying that it hasn’t announced a date yet.
I have a trip booked at the Resedence Inn Central Park NYC, currently at 40,000 point a night but will be 35,000 points with the new chart. Since our trip is planned towards the beginning of August (8-10), I’m just wondering what I should do!
Thanks!!!

Brian Ewanchuk

Joe

The real question in my mind is how will they treat the nights/flights packages.

Under the new system, they’re undergoing a HUGE devaluation (not “fair” to point collectors at all!). in that they’ll be much more expensive to book.

The real arbitrage will come if they’re transferred at face value.. that is, a category 7 certificate will be honoured at the new category 7 hotels post-August.

Think about that. W Maldives is category 7. A 7 night category 7 package with 120,000 miles is 330,000 points! Meaning it’d cost just over 47,000 points a night.. not even counting the 120,000 airline points!

Linda McCallum

Hi – I just talked to Marriott about flight packages – they said that if I purchases one now – before Aug 1 – the value of my hotel segment would stay the same. That is – if I buy a Level 7 Marriott package – it will stay the same in value – at level 7 – in the new post Aug world! Amazing value!
Linda

Brian Ewanchuk

I assume that the 30K/night amount is based on a standard room and availability. Often a hotel will allocate rooms for hotel redemptions and once those rooms are filled, they open additional rooms up at much higher rates.

I would expect that that’s why you are being quoted much higher rates.

Allan

Brian, How far in advance does Marriott’s calendar allow you to book? Over a year? Say I want to book the St. Regis Maldives in November 2019. Would I have to wait until November 2018 to book it? Thanks

Brian

A Alin

Thanks Brian. What would you say the average value of a Marriott point is based on the new award chart? I have been reading it is between 0.0081 and 0.9 but am interested in your thoughts. I know there are a lot of factors depending where you are booking – just wondering what you would say the average is.